Yesterday afternoon Judge Amos Mazzant, who sits in the Sherman Division of the Eastern District of Texas, issued a preliminary injunction prohibiting the U.S. Department of Labor from implementing new overtime exemption rules issued in May of this year that were set to go into effect on December 1. The action was in a case brought by the attorneys general of 22 states, and also saw amicus briefs from numerous third parties interested in the issue.

While the order is not a final one - as your O'Connor's tells you a preliminary injunction is followed by a permanent injunction which is decided under a different standard - the order of denial is immediately appealable to the Fifth Circuit Court of Appeals, and after that potentially to the U.S. Supreme Court. There are also numerous variables depending on what Congress or the incoming administration decides to do on this issue.

If you're advising a client on what to do in this area, you could do worse than read this summary by Seyfarth Shaw's wage & hour litigation group explaining just how confused this area now is.

Apparently it's JMOL week. Earlier this year a Sherman jury in Judge Amos Mazzant's court found for the plaintiff, and assessed a little over $1.1 million in damages. Earlier this week Judge Mazzant ruled on the postverdict motions. He denied the motions challenging the jury's verdict, and resolved the parties' disputes on the calculation of interest and court costs.

The Court denied the plaintiff's request that the Court find the case to be "exceptional" under 35 U.S.C. 285 and assess attorneys fees against the defendant. But it did grant in part the plaintiff's request for an injunction, finding that injunctive relief was appropriate, but the plaintiff's proposed injunction was overbroad.

Last year a jury in Judge Richard Schell's court in Plano returned a verdict for the plaintiff in Texas Advanced Optoelectronic Solutions v. Intersil Corp., 4:08cv0451, a complex breach of contract, trade secret misappropriation, tortious interference with prospective business relations and patent infringement case. The jury awarded various amounts under various theories, with the total around $88 million (of which the patent damages of $73,653.51 was less than one-thousandth of the total awarded), and included in its findings that the defendant had willfully infringed the patent claims.

This week Judge Schell ruled on the motions for judgment as a matter of law, and in doing so trimmed the damages to reflect duplicative awards under different theories (essentially cutting the tortious interference elements) to a final total of $77 million. The Court also ruled on the plaintiff's request for enhanced damages under Section 284 based on the willful infringement finding and for "exceptional case" status under Section 285.

In language reminiscent of Judges Yeakel and Costa rejecting 285 claims after defense wins at trial, Judge Schell agreed with the defendant that even though the jury rejected its noninfringement and invalidity arguments, the defenses were not objectively unreasonable. This finding defeated objective willfulness and thus enhanced damages under 284. For 285 purposes, the Court concluded that the plaintiff had not carried its burden to show that the case was "exceptional" for 285 purposes, and denied the request for attorneys fees.

Eastern District juries have returned a couple more patent verdicts in the past week. In the first, in Judge Mazzant's court in Sherman the jury found the asserted claims infringed, not invalid, and assessed $1,095,807.30 in lost sales and $129,148.57 in reasonable royalty damages. The case went to trial after Judge Mazzant denied the pending 101 motion, finding that the claims didn't run afoul of Alice.

Meanwhile, over in Tyler in Judge Schroeder's court a jury was passing on damages only with respect to some claims since infringement was found by a prior jury and that finding was affirmed by the Federal Circuit, and infringement and damages with respect to some newer claims. The jury found $334 million in damages for the first set of claims (the Federal Circuit had thrown out the prior damages finding of $362 million but affrimed the finding of infringement and not invalid), and infringement and an additional $290 million on the second claims, as well as willful infringement of those claims.

Working out of our Sherman office today (a true Texas office, with pickup, flags, and "everything's bigger in Texas" firm sign) before Judge Amos Mazzant's investiture across the street at the Paul Brown Courthouse this afternoon.

Following more than three years of bankruptcy proceedings, the bankruptcy court approved a proposed settlement agreement between the bankruptcy trustee on behalf of the bankruptcy estate with two claimants against the estate. Another claimant appealed the order to district court, asserting that the bankruptcy court erred in approving the trustee's proposed settlement when the trustee offered no evidence in support of the settlement at the hearing (there was alleged to be evidence in the record from previous proceedings, and to be fair - they did hand up a notebook) and in approving the settlement under the applicable factors.

Judge Clark began by noting that the bankruptcy court's findings of fact were reviewed under the clearly erroneous standard and its conclusions of law de novo, with its decision to approve the settlement reviewed under an abuse of discretion standard.

After reviewing the underlying facts, the Court concluded that the bankruptcy court did not abuse its discretion in approving the settlement despite the fact that evidence was not offered at the hearing, noting that the case already had more than 1,200 entries on its docket sheet, and the bankruptcy court had already held a lengthy trial on contested claims in the case. At the hearing on the settlement agreement, the trustee requested that the Court take notice of the record, and no party objected to the Court relying on that prior evidence presented to it as the basis for its determination of the settlement agreement – in fact counsel for the objecting claimant was the only counsel to appear by phone rather than in person, and did not offer any evidence or witnesses in opposition to the settlement agreement.

With respect to whether the bankruptcy court abused its discretion in approving the settlement under the relevant factors, the Court concluded that after reviewing the lengthy record, considering the bankruptcy court's wealth of experience with the parties to the appeal and to the settlement agreement, the Court could not say that the bankruptcy court abused its discretion in approving the settlement agreement under the applicable factors.

Last Friday a jury in U.S. District Judge Richard Schell's court in Plano (back when he was an active judge) rendered a verdict in favor of the plaintiff in a complex intellectual property case, Texas Advanced Optoelectronic Solutions v. Intersil.

Breach of Contract

After being instructed as a matter of law that the defendant retained confidential information in breach of a confidentiality agreement, the jury found one dollar in nominal damages attributable to the retention of that information, and that the defendant had failed to comply with the confidentiality agreement. It assessed damages at $12 million as a reasonable royalty arising from this failure to comply.

Trade Secret Misappropriation

The jury then found that the plaintiff had proven that the defendant misappropriated its trade secrets, and assessed $48,783,007 in damages, choosing to place the damages under disgorgement as opposed to reasonable royalty. It further found that the misappropriation resulted from fraud, malice or gross negligence, and assessed an additional $10 million as exemplary damages for that trade secret misappropriation.

(For those of you keep track, we're up to $70,783,007 in damages, and we're not even to the patent claims yet. You might want to resharpen your pencils now. This was a long verdict form).

The jury was then asked whether the defendant had proven that the plaintiff must have known or must have reasonably been able to discover that the defendant had use the plaintiff’s proprietary information to compete products before November 25, 2005, and answered no. It did find, however, that the plaintiff had proven that the defendant fraudulently concealed the facts upon which the plaintiff’s misappropriation of trade secrets claim was based.

Tortious Interference

The jury found that the defendant intentionally interfered with the plaintiff’s prospective business relations with Apple, and assessed as damages $8 million as the amount that would reasonably and fairly compensate the plaintiff for its lost profit damages arising from the defendant's intentional interference with its prospective relations with Apple.

($78,783,007).

The jury also found that the plaintiff proved by clear and convincing evidence that the defendant's tortious interference was, again, the result of fraud, malice or gross negligence, and assessed another $10 million in exemplary damages for that tortious interference.

($88,783,007).

Patent Infringement

The jury found that all four of the accused products infringed all six asserted claims of the patent in suit, and that the defendant had not proven by clear and convincing evidence that any of the claims were invalid due to obviousness, for failure to satisfy the written description requirement, or for failing to contain a sufficiently full and clear description of how to make and use the full scope of the claimed invention. (In an charming note, the jury not only checked the box for “no”, but added a handwritten “No” for each of the 18 boxes where it was asked and invalidity question).

As far as damages, the jury assessed $73,653.51 in patent infringement damages, and found that the infringement of the patent was willful

($88,783,007 + $73,653.51 = uh, $88 million and some change)

Equitable Defenses

The jury found that the defendant had not proved that its conduct was excused because of laches or unclean hands.

This opinion by Judge Bush in Plano provides a good overview of the contours of habeas petitions, which make up a substantial portion of the cases filed in federal courts. The writ of habeas corpus, also referred to as the Great Writ, is used to determine if the detention of a prisoner is valid. A writ of habeas corpus, i.e. "you have the the body" from Latin, is used to bring a prisoner or other person before the court to determine if the person's imprisonment or detention is lawful.

Essentially, an inmate, usually proceeding pro se, files a motion to vacate, set aside, or correct sentence pursuant to 28 USC section 2255, challenging constitutional violations concerning his conviction. Such motions are typically referred to magistrate judges for findings of fact, conclusions of law, and recommendations for the disposition of the case by the district judge pursuant to 28 USC section 636 and the Amended Order for the Adoption of Local Rules for the Assignment of Duties to the United States Magistrate Judge in the Eastern District.

The first step in a habeas petition is a conviction of the movant, followed by a sentence of imprisonment. In some cases, the conviction is followed by a direct appeal to the Fifth Circuit, which is unsuccessful or, as in this case, dismissed as frivolous.

What happens next is that the movant files a motion pursuant to section 2255, asserting that he is entitled to relief because of alleged errors in the conduct of his case. Typically there are complaints regarding the performance of trial counsel or appellate counsel, usually that there was ineffective assistance of counsel at each critical stage of sentencing of and appeal. Or the alleged error may be by the trial court or the Government.

In any event, as Judge Bush noted here at the outset of his discussion "a section 2255 motion is 'fundamentally different from a direct appeal'" and only a limited range of claims may be raised, compared to a direct appeal. Errors of law are not enough – the error must be of constitutional or jurisdictional magnitude.

In this case, movant Smith (no relation) actually was not convicted of a crime - he signed a plea agreement which included a waiver of proceedings under section 2255, which the Court noted was permissible. Thus this case does not have the usual recitation of alleged errors during the trial or appellate process (I know - I'm disappointed as well). Instead, the core of the ruling was the Court's review the terms of the plea agreement, including all of the actions that took place at the plea hearing, during which the Court questioned the movant and explained his rights and what he was giving up as a result of his plea of guilty. After an extensive recitation of the facts surrounding the plea, Judge Bush concluded that the plea was in fact voluntary and knowing, thus the waiver must be enforced. The court also noted that the claims of ineffective assistance of counsel did not affect the plea or waiver it self, thus they did not provide relief either. Out of an an abundance of caution, the Court also discussed the movant's claim that the government breached the plea agreement, and concluded that this was not the case. Finally, the court reviewed the standards for a certificate of appealability of a final order in a section 2255 proceeding, and concluded that the movant had not met the standards for such relief

To wrap everything up, Judge Bush recommended that the movant's motion for relief under section 2255 be denied, the case be dismissed with prejudice, and the request for a certificate of appealability denied. He concluded by setting forth the timing and substantive requirements for objections to the findings and recommendations he had just made, and explained the consequences of failure to file objections.

In a prior ruling in this case, Judge Schell addressed the issue of pre-– suit damages, and defendants' argument that the plaintiff's failure to mark its product with the asserted patent precluded it from obtaining damages that predate the filing of the lawsuit. The Court determined that genuine issues of material fact existed regarding the plaintiff's compliance with the marking statute, and denied the motion for summary judgment on this issue. For the same reason, the Court denied the request to exclude the plaintiff's damages expert.

However, having previously determined that the plaintiff had failed to create a genuine issue of material fact with respect to whether the defendant sold or offered to sell the plaintiff's patented invention, except for the percentage of sales of the accused devices discussed in a specified declaration, the Court granted the defendants' request to exclude the expert's opinion regarding damages outside this percentage.

The Court noted that the parties were also in something of a snit over the weight to be given the experts conclusions. It observed that the expert could use evidence that was "reasonably relied upon by experts in the particular field in forming opinions or inferences on the subject" even if the evidence was not otherwise admissible, as provided for in FRE 703. However, it found that the remainder of the parties' arguments went either to the nature of the evidence relied upon, which was covered by Rule 703, or to the expert's resolution of the available evidence, which was sufficiently reliable, the court concluded, to support its admission. "Sorting through the competing conclusions drawn from the available evidence is a task best left to the jury," it wrote.

This is a pro se case against the plaintiff's mortgage company, in which Defendant filed a motion to dismiss the plaintiff's claims. After reviewing the record, Judge Bush dismissed for failure to state a claim Plaintiff's claims of breach of the implied covenant of good faith and fair dealing, violation of the Texas Deceptive Trade Practices Act, § 17,41 et seq., and equitable estoppel. However, he held that the case would proceed as to Plaintiff's claims of breach of contract and promissory estoppel regarding the FHA Trial Agreement and any promises made thereunder.